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News < Back Sarbanes Oxley : Auditing : Back Office AICPA Intends to Work With FASB to Evaluate Potential Changes to GAAP
?This is a noteworthy milestone for the constituents of private company financial reporting who argue their needs are significantly different from those of users of public company financial reporting,? Robert Bunting, Chair of the AICPA said. Because private companies represent an important part of the nation?s economy we must ensure that today?s and tomorrow?s accounting standards remain relevant to their constituents? needs,? he added. The resolution adopted by the AICPA Council directed AICPA management to work with the Financial Accounting Foundation (FAF) and the Financial Accounting Standards Board (FASB) to identify and implement a process that would evaluate, where appropriate, potential changes in recognition, measurement, and disclosure from current GAAP as applied by public companies. ?We are happy with the Council?s vote,? Barry Melancon, AICPA President and CEO, said. ?It moves us on to the next phase, and we look forward to working cooperatively with FAF and FASB on this initiative.? The vote follows the March release of the report by the AICPA?s Private Company Financial Reporting Task Force that unanimously recommended that a process be established to improve the usefulness of private company financial reporting. The task force began its work more than a year ago in response to concerns expressed by some interested parties about the relevance, benefits, and related costs of certain financial reporting requirements for privately held, for-profit entities. ?Overall, the response from those surveyed rated the value of GAAP financial statements of private companies quite highly on consistency, providing comparability among companies, and on their use as a tool in credit and investment decisions,? said James G. Castellano, CPA, and former Chair of the AICPA, who headed the Task Force. ?However, through our discussions, focus groups, and research, we learned that constituents rated certain GAAP requirements as providing relatively low relevance and decision usefulness to constituents of private company financial reporting. It?s this research that resulted in Council?s vote today,? he said. The task force was comprised of key constituents of private company financial reporting. The report?s conclusions were based on input from more than 3,700 lenders, investors, sureties, business owners, financial managers, and public accounting practitioners. Robert Herz, Chairman of the FASB, said, ?Private companies are a vital force in the nation?s economy and it is, therefore, critical that their financial reporting be conceptually sound, cost effective, and provide relevant, reliable and useful information. The FASB has taken a number of steps in recent years to increase the voice and participation of private company users, preparers and auditors in FASB activities, and to codify and simplify the GAAP literature. We are very open to exploring ways to further enhance the overall value of private company financial reporting.? The AICPA, FAF and FASB agree that any proposed changes that might result from this effort would need to be fully exposed for public comment and debate. The American Institute of Certified Public Accountants is the national, professional association of CPAs, with approximately 350,000 members, including CPAs in business and industry, public practice, government, and education; student affiliates; and international associates. It sets ethical standards for the profession and U.S. auditing standards for audits of private companies; federal, state and local governments; and non-profit organizations. It also develops and grades the Uniform CPA Examination. 
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